Recently, we released a short video to our insureds and brokers talking about the recent rash of fire losses throughout the lumber industry. If you have not seen it, please click here and take a moment to review it. I think the message is a very important one and a clear one. In short, the forestry, light wood manufacturing, and building material dealer industry is enduring a wave of significant fires. While PLM has had its fair share of these fires, our share is in the minority when considered against the total that we are hearing and reading about in the news. We are more than a little concerned, and I believe that you should be as well! Some of our insureds and your clients may respond with something along the lines, “I haven’t had a loss in xx years”, however, I would suggest that the vast majority of the significant events impacting the insurance market involved customers just like them. Since we released that video, a short four weeks ago, we have seen at least six more significant events, two involving PLM insureds with our share of the six totaling over $10M!
The property insurance and reinsurance market has endured a run of bad luck over the last several years due to severe winter weather, hurricanes, wildfires, tornadoes, hail, and large non-weather-related fires. The “capacity” or supply of coverage available to write larger limits has been shrinking in the marketplace. When capacity or supply shrinks and demand surges (as it has), that usually results in increased pricing. This is only being underscored by record inflation, skyrocketing building materials costs, supply chain delays (that are negatively influencing the insurance industry’s ability to settle claims quickly and efficiently thus driving up business interruption losses) and increased labor costs.
This is not a pretty picture to be honest. In reviewing and reading about the causes of the losses, frankly, it’s rather disappointing. We are regularly seeing things like poor housekeeping and a failure to follow good housekeeping programs, poor dust collection measures, uncontrolled smoking by employees, and delayed maintenance as insureds wrestle to get orders out the door, choosing to do so over completing routine calls for maintenance. I can assure you of one thing, prioritizing getting the order out of the door is going to be tough when your client’s facility is a smoldering pile laying on the ground! We have seen a number of articles that identify the root cause of some of these losses as a failure to follow hot work procedures. The issue of extension cords and the problems associated with temporary wiring has also reared its ugly head. Several losses in industry have been caused by fireworks. There is not much that your client can do in those situations unless they know it is going to happen in their immediate area where we then suggest a fire watch. The list goes on!
So, what can we (as in you, the insured, and PLM) do about it? We have asked our loss control and business development people to redouble their efforts on visits to insureds’ facilities and to increase the number of formal loss control recommendations being issued to address these areas of concern. We will be more scrutinous in our visits because it is the right thing for all of us. Its intention is to ultimately protect the insured, their employees, and their business. From our perspective, we only want to insure businesses that are interested in avoiding losses.
What can you and your clients do? For the most part, our insureds are wonderful businesspeople and know how to operate their firm well. However, simply put, too many of them also think they are licensed electricians or machinery installation contractors. We ask that you encourage your clients to hire a professional for their electrical work and the install of their new or replacement equipment. If they insist on doing it themselves, they should bring a professional in annually to inspect their work. When a fire breaks out, they should call the fire department first, before they try to put the fire out!
You would be surprised about how many losses we see where when the fire department does successfully extinguish the fire the scene is littered with empty fire extinguishers and hoses. Finally, have them get up from behind their desk and walk their facility. Most of the causes of these fires are obvious, particularly to those that have been in the business for a while.
Of course, I would be remiss if I did not discuss the ongoing profitability problems associated with the commercial automobile line. Commercial auto losses continue to escalate, particularly in urban areas, and in the building material dealer segment. Social inflation, out of control verdicts, and rising medical costs and replacement parts are hurting us from the claims side. While we attempt to work more closely with insureds in managing and training drivers, we also understand that finding drivers is a struggle for everyone in the industry.
This problem will not be fixed by rate increases alone, but rather by a deeper commitment on both our parts to execute serious loss control measures. Too many insureds are signing up for loss control programs but then not utilizing those programs or looking the other way because it’s tough to find replacement drivers.
Simply implementing a continuous MVR program or installing front and rear facing in-cab cameras is not going to fix loss problems unless they are willing to use the information the programs generate. The only thing worse than not having these programs (and others like them) in place is having them and not enforcing them! Consider what a jury will do if they find out (and they will find out) that your client allowed a bad driver on the road or allowed someone to cover the rear facing in-cab camera. You cannot buy enough insurance coverage for these kinds of situations. So, encourage them to recommit to safety and ask us for help. We are here to consult with you and your clients and to help them get started, but in the end, we cannot do it for them!
Finally, now that we are a little more than halfway into the year, I wanted to give you an update on where we are today. The bad news is that the investment marketplace has been turbulent to say the least.
On the more positive side of things, we have not had any problems securing the capacity we need, and want, to accommodate the needs of our insureds and to grow our business. We are pleased to inform you that we are well ahead of our production goals, for the most part driven by our surging renewal retention. We feel this is an indication of our insureds understanding the value we deliver in return for the insurance premiums they pay. New business is a little bit lower than our objectives, but remains significant, with us being on pace to write in excess of $24M of new premium this year. We will redouble our efforts in this area in the second half of the year.
In other good news, we were pleased that A.M. Best recently affirmed our A- (Excellent) financial rating with a Stable Outlook.
We are fully back out on the road and on pace to do more insured and prospect visits in 2022 than we have ever done before. We expect to attend over 200 broker or insured tradeshows this year, spreading the word of our capabilities and desire to grow our business profitably. Our social media efforts have started to reap dividends both in bringing in new business to PLM and in being able to engage with our current insureds and brokers.
Our net promoter score (NPS) is at an outstanding level in the mid-70s, almost 20 points higher than the insurance industry average. This program will continue to be rolled out with our insureds soon being able to evaluate specific individuals such as those that are handling their claims, the loss control and business development representative visiting their operations, and even the PLM employee who is underwriting their account. Net Promoter Scoring will allow you and your clients to provide us with point of interaction feedback to enable us to recognize outstanding individual efforts by specific employees within PLM or to gear up training when things do not go so well.
We are pleased that are professional education and development program is growing deeper roots within our organization, thus ensuring that you are dealing with an insurance professional when you interact with PLM. This year, four of our colleagues have secured their Chartered Property Casualty Underwriter (CPCU) designation. They include Genevieve Ventiere (ABM – Brokerage Marketing Manager), Matthew Kienholz (Director of Regulatory Compliance), Chase Luffey (Underwriter), and Kristin Wilson (Regional Manager of Field Operations). On a personal note, I was very pleased that my own daughter, Maggie, who works for another insurance company, also earned this distinguished designation. This does not diminish the efforts of the entire PLM team wherein 99% of us (yes, even me) are involved in some form of professional development and education.
So, as we look to the rest of this year, we face a magnitude of different challenges, but I have no doubt that the PLM team is up to the challenge. We are excited about the future. I personally look forward to hearing your thoughts and comments. Feel free to reach out to me at email@example.com or at (267) 825-9246.
Producer Update: Issue 3 – 2022
IN THIS ISSUE:
- President’s Commentary
- Cyber Corner: Don’t Forget About Mobile Attacks
- The Experience Mod Explained
- Plumb Safety: Prevent, Learn, Maximize: Lessons from Large Losses
- The Dovetail: The Mystery of Motor Carrier Filings
- The Dovetail: Strengthening Partnerships Through Feedback and Action
- Spotlight On: Upcoming Events List
- Recent Wins